A credit card company might take legal action if you default on your payments after several collection attempts. If you fail to honor your obligation to pay the debt, the creditor can file a lawsuit against you and seek a civil judgment. If and when the company gets a court judgment against you it can use assets you own to cover the debt.
The company usually notifies you by phone or mail that you have been late with your payments after 60 days or 90 days. When you fail to make payments after that the company usually hires a collection agency. If their efforts prove unsuccessful the company can file suit against you in civil court. The judge can enter a judgment against you as long as no facts about owing the debt are in dispute, such as your name, the signed agreement with the credit card company and records of the payments you owe.
With the civil judgment against you in hand, the credit card company can use several methods to make you pay. The company might take money from your wages or bank account, or seek payment through assets that you own, such as your car. It can also file a lien against your property, giving the company a legal right to use it as security for repayment or collateral for the debt when the property is sold. These actions cannot be done without a civil judgment.
If you don’t have the money or property to repay the debt in full, the civil judgment stays in effect for 10 years or more, depending on the state where the judgment was granted. The company can continue efforts to take your wages or money from your bank account, as well as legally obtain assets for payment, while the judgment remains in effect. Though the judgment disappears from your credit report after several years, creditors can renew it before the expiration date and continue enforcement of the ruling.
To avoid a civil judgment or legal action from a credit card company, contact the creditor as soon as you're having difficulty making payments. You can often negotiate to stretch out payments or reduce them to an amount you can afford each month. You can also negotiate payments after a judgment has been filed against you to keep the company from going after your wages or property.
- Nolo: Credit Card Debt Judgments
- Bankrate: When Will Judgment Disappear from Credit?
- Bills.com: All About Judgment and Credit Card Debt
- Consumer Financial Protection Bureau. "What Is a Judgment?" Accessed March 16, 2020.
- Consumer Financial Protection Bureau. "What Is a Statue of Limitations On a Debt?" Accessed March 16, 2020.
- Texas Law Help. "What Is an Affirmative Defense?" Accessed March 16, 2020.
- Federal Trade Commission. "Time-Barred Debts." Accessed March 16, 2020.
- The Florida Bar. "The Life of a Money Judgment in Florida Is Limited for Only Some Purposes." Accessed March 16, 2020.
- Virginia Law. "§ 8.01-251 Limitations on Enforcement of Judgments." Accessed March 16, 2020.
- Consumer Financial Protection Bureau. "How Long Does Negative Information Remain on My Credit Report?" Accessed March 16, 2020.
- Consumer Financial Protection Bureau. "What Is a Garnishment?" Accessed March 16, 2020.
- Consumer Financial Protection Bureau. "Can a Debt Collector Take My Social Security or VA Benefits?" Accessed March 16, 2020.
- County of Napa. "Real Property Levy - Writ of Execution." Accessed March 16, 2020.
- U.S. Marshals Service. "Service of Process: Writ of Execution." Accessed March 16, 2020.
- National Association of REALTORS®. "What Is a Property Lien? An Unpaid Debt That Could Trip Up Your Home Sale." Accessed March 16, 2020.
Jerry Shaw writes for Spice Marketing and LinkBlaze Marketing. His articles have appeared in Gannett and American Media Inc. publications. He is the author of "The Complete Guide to Trust and Estate Management" from Atlantic Publishing.